By GRT Guest Blogger Dallas Terry, Sustainability and Business Strategist
The clean energy and sustainability market in California is poised for major growth thanks to 3 recent policy changes at international, national and state levels. The recent climate talks and agreement in Paris, extensions of the national tax incentives for renewable energy projects and the ruling in California to keep solar net metering rates at their current levels all passed in the month of December, 2015. Each is expected to contribute to a greater expansion of clean energy and corresponding reduction in carbon emissions in the months and years to come.
At the international level the formation of the non-binding yet ambitious Paris Agreement should be a major boon to California’s clean energy and sustainability industry, for which Governor Jerry Brown has provided strong support in recent years. During the talks he expressed his feelings on how far we’d come as a global society, but also how even greater action is needed, “I’ve never seen so many people walking around talking about climate change,” he said. “What we’re doing relative to what needs to be done leaves open a lot of things to be figured out.” The addition of the Agreement to the state’s existing support structure is already inspiring action, such as in the decision by Statkraft, Europe’s largest renewable energy generation company, to invest in sustainable forestry carbon offsets in Northern California.
Meanwhile, the decision by congress to extend the ITC (Investment Tax Credit) and PTC (Production Tax Credit), means a strong continued support for solar, wind and other renewable energy projects in California and across the nation. The ITC and PTC have been providing project financiers with tax credits equivalent to 30% of installed costs and $.023/kWh for solar and wind projects, respectively. The incentives have been eligible for other select renewable projects but have been primarily used for solar and wind development. An extension to each means averting a reduction of the ITC to 10% and a likely end to the PTC. Either or both of these outcomes would have had devastating effects on their respective industries.
Finally, as if enough good news for California’s solar market hadn’t already been shared, the CPUC (California Public Utilities Commission) recently rejected a proposal to subject residential solar owners to reduced credits and/or additional fees for excess electricity production fed back into the grid (aka net metering). The major energy utilities in California, who had put the proposal forward, argue that this will continue to cause non-solar customers to pay higher fees to make up for the lost revenue they say is needed for grid maintenance. What was not properly acknowledged by the utilities is that this will further incentivize more customers to go solar and reduce carbon emissions.
While each of these mechanisms have limited timeframes before they are once again put on the chopping block, their support for reducing carbon emissions and encouraging sustainable growth is imperative as California’s population continues to grow. The synergistic support they will offer to clean energy and sustainable development should do a great deal in buying more time for technological costs to decrease and further decoupling economic growth from increased carbon emissions. This will allow California to truly play its part in driving a more sustainable future for Californian’s and all of humankind.